The Colombian government signals its intention to launch the development of Autogas as a way of making use of new supplies of LPG.

Prospects for Autogas are looking up in Colombia. The government is looking at how best to make use of fresh supplies of LPG that are due to come on stream next year from new gas processing plants. Autogas, the use of which is effectively forbidden at present, could be a major beneficiary, as the government has signalled its intention to change its policy so as to encourage its use.

As part of a process of consultations with the various public-sector bodies with an interest in LPG and the industry itself, the Regulatory Commission of Energy and Gas of Colombia (CREG) held a seminar in Bogotá on the 23rd and 24th of August 2012, entitled LPG: the Silent Revolution.  The objective of the seminar was for the participants to gain an overview of the use of LPG worldwide, to showcase relevant market experiences using LPG as a fuel, and to review its environmental and operational performance compared with other fuels – focusing primarily on Autogas.

The seminar attracted close to 200 people from government and industry, including representatives from the Ministry of Energy, the Ministry of Environment and LPG wholesalers and distributors. Presentations were given by four international experts: Ron Gist from the consulting firm, Purvin and Gertz in the United States; Trevor Morgan from UK-based Menecon Consulting; Michael Kelly from the WLPGA; and Paul Harris, from the South African consulting firm, Integrated Energy Solutions.

Trevor Morgan, the principal author of the WLPGA report, Autogas Incentive Policies, gave the presentation on Autogas, entitled Autogas: The Alternative Fuel? His presentation covered all aspects of Autogas use and policy incentives, including:

• A review of Autogas market trends worldwide and in Latin America.

• An overview of the technical aspects of Autogas vehicles and fuel use.

• The rationale for promoting Autogas as an alternative fuel, including the environmental and practical benefits of the fuel compared with conventional fuels and other alternative fuels

• A detailed review of the different types of policies used to promote investment in Autogas supply and to encourage motorists to use it.

• An analysis of how policies affect the competitiveness of Autogas vis-à-vis conventional fuels and how that affects in demand in practice, based on experience in the leading markets around the world.

• The results of case studies of countries where policies have effective or ineffective in driving market growth.

Trevor concluded his presentation with a summary of what international experiences tell us about what policies work and why and the key lessons that can be applied to Colombia as it goes about trying to develop an Autogas market. It is clear that Autogas could bring significant environmental and health benefits to Colombia, but that motorists will only use Autogas if there is a strong financial incentive from them to do so. That will require significantly lower taxes on Autogas such that the pump price is low enough to ensure a rapid payback on the cost of converting a gasoline-powered vehicle to run on Autogas or the higher cost of a factory-built Autogas vehicle.

He also emphasised that vehicle incentives and other non-financial incentives, such as exemptions from the driving restrictions that are currently imposed in some cities in Colombia for reasons of pollution and congestion, may also be needed to kick-start the market. It will be essential for the Colombian government to demonstrate a long-term commitment to a pro-Autogas policy commitment in order to provide certainty to all stakeholders. Finally, it is important to recognise that success will not hinge on policy alone: all stakeholders need to work together to create conditions for a sustainable market to flourish.

CREG intends to use this information, insights and views obtained at the seminar to start a process of public consultation aimed at defining a domestic price of Autogas and LPG Gas in other sectors that allows growth in the market.

For further information about the prospects for Autogas in Colombia and elsewhere, please do not hesitate to contact Trevor Morgan by email at: trevor.morgan@menecon.com. The latest updated edition of Autogas Incentive Policies can be downloaded for free from the WLPGA website at: www.worldlpgas.com/uploads/Autogas_Incentive_Policies_2012.pdf